Understand the different types of life insurances.

term life

whole life

Term life : Term life insurance provides coverage for a certain time period. It's often called "pure life insurance" because it's designed to only protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. The policy has no other value.

Whole life : like all permanent life insurances policies, whole life provides lifelong coverage and includes an investment component known as the policies cash value. The cash value grows slowly, tax-differed, meaning you won't pay taxes on its gains while they are accumulating. You can borrow money against the account or surrender the policy for the cash. But if you don't repay policy loans with interest, you'll reduce your death benefit, and if you surrender the policy, you'll no longer have coverage.